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Risking a repeat of 2008

By Raafi-Karim Alidina is a consultant with global diversity and inclusion consultancy Frost Included 

One of the biggest arguments raging across the globe right now is how governments balance keeping their citizens safe during the Coronavirus pandemic without damaging the economy further.  Already we’re seeing the drastic economic effects of this disease. The Nikkei, Dow Jones, and FTSE 100 have fallen 15%, 18%, and 25%, respectively. In only 2 weeks at the end of March, over 1 million UK citizens applied for benefits. In the 6 weeks since lockdowns in the US started, more than 30 million people have filed for unemployment benefits, a disproportionate number of whom are Black or Hispanic (the unemployment rates for Black and Hispanic citizens are 150% higher than that of White citizens[i]). US oil prices have turned negative for the first time, and global oil prices are at a 21-year low. And the IMF is predicting that many advanced economies will enter a recession this year, including Canada, the US, the UK, Germany, France, and Japan. What’s worse, the evidence suggests that people from marginalized groups such as women or ethnic minorities feel the effects of these recessions at roughly twice the rate of men, ethnic majorities, and other non-marginalized groups.[ii]

It has only been 12 years since the last major economic downturn, but If there’s one thing we learned from the 2008 financial crisis, it is that as a sector finance has had disproportionate influence on the rest of the economy and therefore society at large. A 2014 report by SNL financial showed that the 5 biggest US banks controlled approximately 7 trillion USD in assets[iii] – for reference, amount of US debt held by all foreign governments is roughly 6.78 trillion USD[iv].It makes sense, then, that the sector has been under a lot more scrutiny since 2008 – the mortgage lending crisis led to recessions in many countries, even deflation in some, and stories of peoples’ pensions, retirement funds, and life savings being wiped out dominated the news cycle.

After the crisis, many questions were asked about governance, accountability and ethics.  2008 demonstrated that a group of highly capable, intelligent people could indeed play it disastrously wrong.

However, there was also a diversity dimension to the financial crisis that did not go unnoticed.  Many questioned whether the crisis would have happened at all if there were more women in finance, such as the Harvard Business Review article that questioned what would have happened had Lehman Brothers been Lehman Sisters[v]?

While some of these articles focused on gender, what the crisis made clear was that dissenting or different voices just weren’t welcome in many firms in the industry. A 2011 IMF report, for example, stated that despite its continued optimism through even April 2007 several senior staffers felt that expressing dissent with this view could “ruin one’s career” and that there was active discouragement of speaking “truth to power”.[vi]A 2009 report from Reuters showed that this group think trend exists across the financial industry, and that a fear of seeming different is what drives it.[vii]

So, it was clear that post-2008, bringing in some diverse voices and ensuring they could be heard might do the industry some good.

But did we really learn anything from 2008?

Has D&I in finance improved since 2008?

Despite the fact that D&I was talked and written about as a factor in perpetuating the 2008 crisis, most of the response around it in financial firms may not have risen to expectations.  While firms have often talked a big game about their D&I initiatives, and many financial organisations have invested large amounts of money in D&I, the data show that there may not be as much progress as you’d expect given the rhetoric and investment.

For example, New Financial, a think tank founded in the wake of the crisis to make the case for bigger and better capital markets in Europe, found in 2014 that women still made up only 20% of boardrooms and 15% of executive committees[viii].  Moreover, research from Clara Kulich and her colleagues at the University of Exeter found that even when women are at the top of financial firms, they are still compensated extremely differently from their male counterparts.  In fact, their findings show that even when a firm led by a woman significantly outperforms the industry, female executives see virtually no bump in bonus. By contrast, as companies led by men outperform the industry, male CEOs’ bonuses increase at a rapid rate.[ix]



(Kulich, et al., 2011)

Even in 2019, a report from the US House Committee on Financial services found that among major banks boards and senior leadership are still mostly white and male. No chief diversity officers reported directly to the CEO, diversity metrics are not tied to compensation, and only half of big banks tie diversity metrics to performance.[xi]

It’s not that there have been no improvements at all – the UK Treasury-backed Women in Finance Charter has been signed by hundreds of organisations across the financial services sector that employ over 600,000 people between them[xii]. Not to mention the pressure that has been put on financial firms due to government-mandated Gender Pay Gap reporting in the UK.

But while certainly some improvements have been made, and organisations are now becoming much more aware of the problem that might exist, there is clearly still a lot of work to do.

Responding inclusively to COVID-19

The global Coronavirus pandemic has led to many wondering if working from home in lockdown will start to create more gender balance as different-sex couples work together to balance doing their jobs with performing domestic and emotional labour, including taking care of kids who are now at home 24/7.  But from the data we’ve seen so far, it seems that these gender biases are only being perpetuated further.

 In academia, for example, analysis of journal submission data suggest that women are spending much less time producing research while men are either keeping the same pace or increasing their research productivity.[xiii]  Additionally, even though women already spend 2.5 times more time cooking than men, with restaurants closed this disparity seems to only be increasing.[xiv]

Without making more functional changes that actually embed D&I in the way financial firms work, the results of 2008 are likely to repeat themselves.

Make D&I an executive competency

 One of the biggest changes that needs to be made is to move D&I out of HR and into the Executive.

When D&I is a subset of HR (often called Human Capital in banking), the focus is very technical with a series of initiatives in terms of recruitment, “talent acquisition”, and other extrinsic factors.  D&I interventions are focused on changing things like the flexible working policy to be more freely available, but don’t get to focus on whether employees actually feel like they can make use of that policy without it negatively impacting their career at the firm.

However, the real cultural change programme, what the organisation understands to be “culture”, sits in the Executive Office and is seen in terms of ‘conduct’.  Post crisis, ‘conduct’ is far higher up the C suite agenda, whereas D&I is relegated to a sub-division of HR.  While attention definitely became more directed at conduct in the C suite immediately after the financial crisis, these ideas about conduct and D&I are now already moving back into the domain of HR. The challenge is understanding how all of these underlying topics intersect and therefore what leadership and decision-making overall should look like going forward.

The most successful initiatives are when this distinction is overcome.  In this scenario, culture and D&I are both integrated into the culture programme of the firm, led from the top.  Then, it’s about going beyond a compliance-led approach to culture as ‘conduct’ into a more embedded approach where culture becomes about leadership and decision-making.

Once these cultural changes are made, it’s more likely that structural changes like tying D&I metrics to compensation will be met with an appetite to meet the challenge rather than backlash.


Yasmine Chinwala, co-founder of New Financial, says that the financial services sector thinks of itself as a highly meritocratic industry, if not the most meritocratic industry.  “It’s all about performance, and the best talent will inevitably make it to the top”.[xv]  But we now know from the data that this isn’t necessarily the whole story, and since the 2008 crisis, with the extensive number of articles and books written about the issue, the rest of the world knows it too.

She also says, though, that if the industry wants to make a case for the value of what it does and how it operates, financial services needs to focus more on outcomes for its customers. In order to make this case effectively, the industry needs to embrace cultural change, and one way to demonstrate a concrete commitment to change is through a greater emphasis on diversity.

We couldn’t agree more. Because while much has changed in the world since 2008, the facts show that diversity and inclusion in finance may not have changed as much as much as we might like or need.  And without more inclusive decision-making, we are risking that 2020 will be 2008 all over again.

Raafi-Karim Alidina is a consultant with global diversity and inclusion consultancy Frost Included and is the co-author of new book Building An Inclusive Organisation, published by Kogan Page.


[ii]https://files.stlouisfed.org/files/htdocs/publications/review/10/01/Engemann.pdf; http://blog.policy.manchester.ac.uk/featured/2014/09/racial-inequality-in-employment-worsened-in-recessions/; Charles, A. (2011). THE GREAT RECESSION AND ETHNIC INEQUALITY IN THE US LABOUR FORCE. History of Economic Ideas, 19(2), 163-176. Retrieved May 11, 2020, from www.jstor.org/stable/23723544







[ix]Kulich, C., Trojanowski, G., Ryan, M. K., Alexander Haslam, S., & Renneboog, L. D. (2011). Who gets the carrot and who gets the stick? Evidence of gender disparities in executive remuneration. Strategic Management Journal32(3), 301-321.

[x] ibid


[xii] Interview with Yasmine Chinwala, co-founder, New Financial, 16 Aug 2018



[xv] Interview with Yasmine Chinwala, co-founder, New Financial, 16 Aug 2018